A new report has revealed that more than a quarter of family business owners are worried that their company will die when they retire.
The UK-wide survey also revealed that a third of owners believe younger family members are not as interested in pursuing the business as was the case in past generations.
Another interesting statistic was uncovered in the report, with 33 per cent of those at the head of a family business reveal they believe that younger generations would make changes to the operation that they themselves wouldn’t agree to.
Proof, if it were needed of the generation gap that some would say has always existed. However, it doesn’t mean young people are not interested in business.
One possible reason given for the fact young people are seemingly not that interested in following their father or mother’s footsteps is that many would like to start their own business instead.
And that is backed up by separate, earlier research which highlighted that one in seven undergraduates are looking to become entrepreneurs when they leave university.
At the heart of all this angst for family businesses is the need for a succession plan – a clear direction that the company will take when the present head decided to call it a day.
However, in many cases that is not an easy subject to broach. Family relationships and dynamics can make it a potential minefield. According to the Family Business Institute, planning for succession is the “toughest and most critical challenge” they face.
However, they also point out that it can also be a great opportunity to maximise opportunities and create a “multi-generational institution that embodies the family’s values and mission for generations to come”.
So it is a vitally important subject that needs tackling sooner, rather than later. Long term planning will avoid problems that could be potentially harmful to the business.
And it really is something that should ideally be started right at the beginning of the business journey.
As with everything in business, good communication is at the heart of this. The needs of the company must also be put at the heart of the discussions.
Get this wrong and the consequences could be devastating. Get it right and our business will continue to move in the right direction with the minimum of disruption.
It can be another difficult subject for a family firm but, as in all matters of business, the head has to overrule the heart.
A number of key questions have to be at the centre of this. What is the best way forward to ensure the continued success of the business?
If the next generation is taking the helm have they the skillsets needed, and if not how can they be acquired?
How will you ensure that a smooth transition is carried out to minimise disruption? How will ownership be transferred and what will the structure of the company look like on your departure?
If succession is not an option is there another plan? Is there a management team keen to take control? Is the sale of the business a way forward?
All options have to be considered clearly and emotion should not come into it. When it comes to succession planning, it really is ‘good to talk’.
To discuss any issues raised in this article and succession planning for your business contact me on 01772 430000.